www.forbes.com Reuters, 01.30.03, 11:54 AM ET By Jane Sutton

MIAMI (Reuters) - War anxiety, rising fuel costs and a fragile U.S. economy have tempered the outlook for a Caribbean tourism industry wobbling toward recovery during the crucial winter vacation season, industry officials said. Fear that the United States could soon be at war in the Middle East -- travel marketing expert Peter Yesawich calls it "Iraq-nophobia" -- is keeping some would-be travelers home and prompting others to wait until the last minute to book trips. The balmy Caribbean islands, whose $34 billion-a-year visitor industry depends heavily on air travel from the eastern United States and Europe, took a thrashing after the Sept. 11, 2001, attacks. The World Tourism and Travel Council estimates the region lost more than 364,000 jobs as a result -- a significant chunk in a region where travel and tourism accounts for more than 14 percent of GDP and employs 2.1 million workers, or about one in seven. In some islands, like the Bahamas, tourism generates more than half the jobs and economic activity. Industry officials expect final numbers for 2002 to show visitor arrivals down by 5 to 10 percent from 2001 regionwide. But by the end of the year, vacationers had begun to trickle back to the beaches and casinos, albeit with heavily discounted air fares and hotel rates that cut into industry profits. "We began to see a recovery that began to look really quite promising by the end of 2002," Jean Holder, secretary general of the Caribbean Tourism Organization, said from the group's headquarters in Barbados. Cuba and the Dominican Republic saw resurgences. Puerto Rico's hotel occupancy rate rose to 73 percent for the year, up from 70 percent in 2001 but still a couple of points below pre-Sept. 11 levels, Holder said. Air Jamaica's passenger count rose by 5 percent last year and its tour operation, Air Jamaica Vacations, has seen an 11 percent boost in bookings so far in 2003, said Allen Chastenet, the airline's vice president of marketing and sales, who also chairs the Caribbean Hotel Association's marketing committee. The gains augured well for the winter high season, when travelers normally flock to the Caribbean to escape the cold. "Any real money that is going to be made in the industry, we certainly expect to make that in the winter," Holder said. But overall bookings lag, with many reservations still coming in less than a month before travel. "While we would normally have seen everything very much in place for February, February is probably the strongest month in the Caribbean, to date that is not the case," Holder said. "We are not despondent but ... we are certainly going into 2003 with a continued state of uncertainty." "Overhanging the whole thing is the uncertainty caused by the threat of war." Energy costs have hit two-year highs amid twitchiness over a potential war in Iraq and a political strike that has choked supplies from Venezuela. Weak economies in the United States and Germany, a traditionally strong market, have pushed revenues down. Airlines have cut fares by 20 percent and more, and hotels are discounting room rates by as much as 35 percent though mostly not at the top luxury resorts. "There's a lot of deal-making going on," said Yesawich, president of Yesawich, Pepperdine, Brown and Russell, an Orlando marketing services company specializing in the travel industry. "The forecast from a consumer point of view is, if you put the time and effort into trying to find a great deal, you'll probably be rewarded." Generally, destinations faring best are the bigger ones in the northern part of the region, which have the best air access -- Puerto Rico, the Bahamas and the Dominican Republic. La Romana and Punta Cana in eastern Dominican Republic have thrived by courting European charter business. "Punta Cana is sold out until March. That's 17,000 rooms on the east coast," Yesawich said. Curacao and the British Virgin Islands, which aggressively recruit European travelers, also saw increases in overnight stays at their hotels in 2002. "The strongman in Europe has been the United Kingdom, which has continued to produce (visitors)," Holder said. Some islands have benefited as cruise lines divert ships from the Mediterranean to the Caribbean to draw U.S. passengers who feel safer closer to home and can drive to U.S. ports of departure. But while cruise passengers account for about one-tenth of the Caribbean's tourism revenue, they spend less than other visitors because they sleep and dine aboard ship. "What we need to do is to make sure that more of the people who come here first on cruises come back and stay in our countries," Holder said. In the meantime, the Caribbean visitor industry is ratcheting up promotional efforts. Hotels, airlines and credit card companies have joined forces with island governments and tourist boards under the auspices of the Caribbean Hotel Association Charitable Trust to launch a $16 million regional marketing plan. TV commercials with the tag line "Life needs the Caribbean," began airing in U.S. markets in August, juxtaposing hectic urban scenes against tranquil shots of palm-fringed islands. The ads returned to the U.S. airwaves in January as the snow piled up in much of the nation. The trust also runs a one-stop booking service through the Web site www.gocaribbean.com. Tourism boards on individual islands have also boosted advertising, some highlighting the islands as a place of calm in a troubled world, others targeting special-interest travelers, festivals or unique attractions. Jamaica is hosting "Bob Marley Week" on Feb. 2-8, paying homage to the late reggae icon with a series of concerts tied with Black History Month celebrations. The tiny British island of Montserrat, which saw its airport destroyed and half its population flee after the Soufriere Hills volcano roared to life in 1995, is promoting tours of the volcano, which still sends spectacular showers of ash and super-heated rocks tumbling into surrounding valleys. Trinidad is inviting revelers to join the Caribbean's biggest Carnival celebration, March 2-4. Steel drum bands and calypso dancers jam Port of Spain to compete in the rummy annual gala. "You're going to see a very aggressive marketing campaign from the trade" Chastenet said. "I think that the consumer is still going to benefit from good value."

www.miami.com Posted on Thu, Jan. 30, 2003 BY JANE BUSSEY jbussey@herald.com

Florida's exports to its key Latin American trading partners fell by $3.5 billion -- or by almost one-quarter -- in the first 10 months of last year compared to the year before, a reflection of the severe economic problems in key countries.

Brazil led the way in the fall-off, with a drop of $1.5 billion in exports in the first 10 months of 2002 compared to 2001. But Argentina's economic problems also bit deeply into goods that left Florida, with a drop of almost $1 billion.

From the experts who crunch trade numbers and follow the trends to the experience of import-export businesses, there are early signs of fundamental changes underway.

Charles Jainarain, president of Greenheart International in Miami, said Florida could see its leading share of trade with Latin America start eroding, flattening the rapid upward trend.

''It peaked in Miami,'' Jainarain said. ``It peaked in Florida and now we are seeing the top of that peak go off a little bit.''

Florida's trade -- especially the commerce recording in South Florida -- grew in leaps and bounds during the 1980s from the shipment of textiles back and forth between offshore apparel factories in the Caribbean Basin. This success was capped with a boom in computer and telecommunications exports in the 1990s.

But Jainarain sees the possibility that this trade could go elsewhere, including the migration of the apparel business to China and Southeast Asia, changing the main ports of entry to the West Coast. Other ports may try to capture some of Florida's share by offering lower shipping prices.

Lowering tariffs gives trade a one-time shot in the arm, producing a boom before and after new trade agreements go into effect. But once the lower tariffs are factored into trade patterns, other economic conditions weigh in: devaluations, tight finance credit and recession. This is what has been happening since late 2001. With economies in Argentina, Brazil, Uruguay and Venezuela shrinking and their currencies falling, exports have plunged.

Individual companies have noted other trends.

Mahmoud Zaher, who runs Mamco, an auto parts exporter that does around 80 percent of its sales in South America, said that business has been tough since the start of 2002. His business primarily supplies auto parts for repairing vehicles, for the end consumer and distributors.

Demand has fallen off from regular clients, but he also no longer receives as much new business.

''We used to get on a daily basis at least five customers contacting us or coming here,'' said Zaher, who has been in the business since 1986. ``These people have disappeared.''

But Zaher said that he plans to ride out the slow down because every area of trade is suffering.

There were some small bright spots in trade figures.

Florida's exports to the Falkland Islands -- two small islands 300 miles off the coast of Argentina with a population of 3,000 people -- jumped by 150 percent, as telecommunications equipment exports rose from zero in the first 10 months of 2001 to $171,000 in the same period in 2002.

www.globeandmail.com By MICHAEL DEN TANDT Thursday, January 30, 2003 – Page B2

There can be no doubt now that U.S. President George W. Bush intends to make war on Iraq. How long the conflict lasts, or where it will lead, is anyone's guess.

Where will Canada stand? We don't know. The reason we don't know is that Prime Minister Jean Chrétien hasn't told us. The reason he hasn't told us is that -- much as he might like to flatly rule out Canada's taking part, absent unshakeable evidence of Iraqi weapons of mass destruction, and of an active alliance between Saddam Hussein and al-Qaeda -- he's afraid. And the reason he's afraid is that the United States is Canada's meal ticket.

Close the Canada-U.S. border, and 85 per cent of our exports have no home. Trade worth $2-billion a day evaporates. Thirty per cent of our gross domestic product goes down the tubes. Suddenly, we're beyond the American perimeter looking in, faces pressed to the glass. And it's cold out there. Imagine the lumber dispute, writ large.

Granted, no one in the Bush administration has even hinted at such measures, regardless of Canada's position on Iraq. But what if there were further terrorist attacks on the U.S. mainland? Hillary Clinton, the Democratic Senator from New York, did not take up Canada-bashing in a vacuum. She reflects a certain constituency. By the end of next year, the U.S. Immigration and Naturalization Service intends to register every person who crosses the border. Anyone can see the way the wind is blowing. We're sleeping with an elephant, and it is angry. Better tread softly and avoid giving offence.

But there's another way of seeing this, and here it is: The United States needs an open border as much as we do. It needs our lumber, our minerals, our car parts, and our energy. We are by far its largest export market -- larger than Japan, larger than all 15 European Union countries combined. If the trading relationship soured, Canada wouldn't suffer alone. South of the border, car plants would close, gasoline prices would soar. Thirty-seven states would lose their largest foreign customer. Recession would come quickly and brutally, and it would make the current economic malaise in the United States pale in comparison. That's not in Mr. Bush's interests, and he knows it.

Think of it this way. In 2001, the total value of Canada-U.S. exchange was $445-billion (U.S.) -- 61 per cent greater than the United States' trade with Mexico, the second-largest U.S. trading partner. That year, according to Canadian government figures, we bought $163-billion worth of U.S. goods. That's about $5,254 for each Canadian. U.S. exports to Ontario alone were worth nearly double those to Japan.

Break the numbers down state by state, and the results are startling. For example, 54 per cent of Michigan's foreign exports in 2001 went to Canada. The bulk of that, worth $8.7-billion, was in auto parts and components, but not all. We also bought $2.7-billion worth of Michigan-made cars, about a billion worth of her trucks, and a cool $4-billion in assorted chemicals, metals, machinery and other industrial equipment.

Or take New York: In 2001, Canada bought 23 per cent of the state's foreign exports -- worth $9.6-billion. About $1.4-billion of that was in car engines and parts. But we also purchased major quantities of telecom equipment ($1-billion), household goods ($1-billion), machinery ($591-million), chemicals $473-million) and agricultural products ($386-million). Where would Mrs. Clinton be, one wonders, if the jobs provided by those industries started to disappear? Across the American heartland, it's the same story. South Carolina, Alabama, Colorado, Arkansas -- all rely on Canada as their key foreign market. Now, some may say, big deal: U.S. states trade far more among themselves than they do with foreigners. True. But nevertheless, exports last year accounted for nearly 10 per cent of U.S. GDP.

And that's setting aside U.S. economic need for our exports -- lumber, car parts, and most important, oil. According to 2002 figures from the U.S. Energy Information Agency, Canada supplies 17 per cent of U.S. foreign crude supply. Saudi Arabia accounts for 13.9 per cent. Venezuela, before the general strike that sent U.S. oil inventories to 25-year lows, supplied about the same amount as the Saudis.

This is not to say that Canada would, or should, wield trade as a cudgel. But nor should Canadians assume that we must toe the American line, regardless of what we think is right, for the sake of bread and butter. Ottawa does have leverage -- enough to chart an independent course.

www.bday.co.za

By David Williams

WASHINGTON — Federal Reserve policymakers left interest rates at a four-decade low Wednesday, banking the economy would awaken from its torpor when war clouds lift and high oil prices retreat.

Federal Reserve chairman Alan Greenspan and his colleagues voted unanimously to leave the federal funds target rate, which commercial banks charge each other for overnight loans, at 1.25%.

"Oil price premiums and other aspects of geopolitical risks have reportedly fostered continued restraint on spending and hiring by businesses," the Federal Open Market Committee said in a statement.

"However, the committee believes that as those risks lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to an improving economic climate over time."

Policymakers agreed, as expected, to keep the economic growth and inflation outlook neutral, meaning they had no particular leaning towards cutting or raising rates in the foreseeable future.

The Federal Reserve had been expected to tread carefully so as not to feed nerves on financial markets just a day after President George W. Bush braced the country for possible war against Iraq.

The two-day committee meeting wrapped up a day before the release of of new economic growth figures, which are widely expected to show growth at an annual rate of 1% or less in the fourth quarter.

But "what we can take away from the comments is that the FOMC members believe that their stance is accommodative enough," said Joel Naroff, president of Naroff Economic Advisors.

"It is only temporary factors that are holding back growth. If that is true, it will take another shock to get the members to cut rates again. That could occur, but the onset of a war with Iraq would not be enough. The war would have to go wrong in some way."

The Federal Reserve's willingness to hold the line on interest rates indicated that policymakers believed they already were in an "extremely aggressive" policy stance, Naroff said.

"And if they do feel that way, you can be sure they will feel the need to unwind that aggressive stance rapidly when growth does return."

Swiss Re chief US economist Kurt Karl agreed.

"During the second half of the year, the Fed will begin to raise rates," he forecast.

"The housing market remains robust, business investment is improving, and consumers are spending. Furthermore, the government is contemplating a hefty tax cut/stimulus package that will boost growth in the short term and increase the need for higher interest rates. By mid-year, oil prices are projected to fall, as the troubles in Venezuela and geopolitical risks recede."

Bush promised in his State of the Union speech to boost economic growth and create jobs with his 674-billion-dollar stimulus package. US firms axed 101,000 jobs in December, when the unemployment rate was stuck at 6.0%.

The US leader also called for accelerating tax-rate cuts approved in 2001 as part of his first 10-year, 1.35-trillion-dollar tax cut, moving them up to this year from their scheduled implementation of 2004 and 2006.

The Wall Street Journal reported Monday that Greenspan had privately told senators he doubted Bush's tax cuts would stimulate the US economy in the short term.

Senators attending the meeting concluded Greenspan would prefer to see them pass a much smaller tax cut or none at all, the Journal reported.

Drew Matus, US financial markets economist at Lehman Brothers, said he believed the economy would prove weak enough over the coming six weeks to warrant a rate cut.

"The Fed essentially decide to take a vacation until the Iraq situation resolves itself over the coming weeks," he said.

www.morningstar.ca 29 Jan 03(6:03 PM) |  E-mail Article to a Friend By Jeffrey Jones

CALGARY, Alberta (Reuters) - Pipeline and utility company Enbridge Inc. <ENB.TO> said on Wednesday fourth-quarter profit slipped due to a loss on the sale of U.S. assets to an affiliate, although operating income matched expectations.

Enbridge, best known as operator of the main pipeline for Canadian oil exports to the United States, also raised its quarterly dividend 9 percent to C$0.415 a share, becoming the second Canadian energy firm to boost its payout in as many days.

It earned C$34 million ($22 million), or 18 Canadian cents a share, in the quarter, down from year-earlier C$40 million, or 25 Canadian cents a share.

Adjusting for a C$5.9 million loss on the sale of the Enbridge Midcoast assets to 12.9-percent owned Enbridge Energy Partners <EEP.N>, the company's earnings were C$40 million, or 25 Canadian cents a share, just a penny under an average estimate among analysts polled by Thomson First Call.

The result was driven by strong performances from Alberta pipelines, the U.S. partnership and a higher return from its major Ontario gas utility, Enbridge Consumers, Enbridge said.

Enbridge sold the southern U.S. pipeline and processing assets to its partnership to cut debt, but was forced to cut the price in September by $109 million to $820 million amid poor energy industry conditions in the United States.

Revenues were C$658 million, down from C$712 million.

For the full year, Enbridge earned C$577 million, or C$3.60 a share, up from C$459 million, or C$2.91 a share, in 2001.

"The significant dividend increase announced today reflects confidence in our ability to continue to deliver above-average earnings growth," chief executive Pat Daniel said.

The dividend boost, the company's eighth consecutive increase, follows an 8-percent increase in rival TransCanada PipeLines Ltd.'s <TRP.TO> dividend and highlights the confidence among Canadian energy transport firms compared with U.S. firms, which are struggling with credit concerns.

Enbridge executives predicted first-quarter earnings of 55-60 Canadian cents a share, down from last year's 71 Canadian cents, a drop blamed on an Ontario Energy Board decision to reject an allowance Enbridge sought related to its stake in the Alliance natural gas pipeline.

But Enbridge said it was sticking to its previous outlook of C$2.85-C$2.95 a share for 2003.

The stock slipped 4 Canadian cents to C$43.36 on Wednesday, down 5.5 percent since the start of the last quarter and lagging a 5 percent rise in the Toronto Stock Exchange's main index.

Despite its expansion into natural gas and international businesses, Daniel said oil transport remained the cornerstone of the company, stressing it accounted for half of earnings.

That business has become more important as the United States has sought secure sources of supply amid tensions in the Middle East and the protracted strike in Venezuela, which provided 13 percent of U.S. oil needs, he said.

"It really highlights the reliability and long-term role of Canadian supply. That positioning has never been better," he said.

Canadian output is increasing with development of Alberta's vast oil sands, a situation aided by new guarantees from Ottawa that the recently ratified Kyoto accord on climate change won't cause insurmountable costs, Daniel said.

With expansion, Enbridge's mainline, which runs to the U.S. Midwest and southern Ontario from western Canada, is expected to pump 1.56 million barrels a day by the end of this year, a jump of 170,000 from the end of 2002.

Meanwhile, Enbridge said chief financial officer Derek Truswell was set to retire on April 1. He will be replaced by Stephen Wuori, now vice president of planning and development.

($1=$1.52 Canadian)